Why Is There a Person in Your ATM?

By Eric Reed

On Thursday morning Bank of America announced that it will begin putting live people on the other end of its ATM machines. Called Teller Assist, the project aims to create an all-in-one experience, offering customers the convenience of an ATM with the human interaction of a storefront.

Although users will still be able to select all of the traditional functions of an ATM, they will now also be able to videoconference with a Bank of America employee. The system will offer some of the same services found at the counter, including redeeming checks for cash and choosing various denominations for a withdrawal. Planned, but not yet implemented, features include making loan payments and splitting deposits among multiple accounts.

ATMs will still offer computerized services 24/7, and Teller Assist will operate from 7 a.m. until 10 p.m. local time during weekdays and from 8 a.m. until 5 p.m. local time on the weekends. According to Bank of America spokesperson Tara Burke, Bank of America will pilot this program with 36 machines in Boston and Atlanta over the second quarter of 2013. Plans for future markets will depend on feedback and are currently evolving.

"We've seen a growing demand for self-service banking," Burke said, explaining the drive behind this new program. She assures customers that fees will remain the same at all ATM's, including those with Teller Assist, and that the only difference will be the expanded functionality.

This technology is part of a greater industry trend toward finding a balance between digital and personal interaction and has been successful for the other banks that have pioneered it, including Coastal Federal Credit Union (CFCU), which debuted its "Personal Teller Machines" in 2008. CFCU is the first institution to got 100% video banking, according to Jim Mecca, a spokesperson for CFCU.

The Personal Teller Machines are dedicated systems, Mecca said, which means that they don't double as ATMs. Instead, they fill all the roles of a traditional teller for CFCU, and have allowed the bank to move that function completely online. Branch staff is now dedicated to complex transactions such as lending and account management, while deposits, withdrawals and checking are all handled by video conference with a teller at the credit union's headquarters.

"It's actually worked out very well for us, because the in-branch management isn't focused on what's going on behind the teller line," Mecca said. "We were really looking at streamlining and optimizing the teller function."

CFCU reports positive results from the digital shift, including increased sales across its branches as well as a higher rate of turnaround for its tellers. Mecca said that the credit union can also operate with less staff now; since it no longer needs to dedicate personnel to rarely visited locations, each teller's time can be used more efficiently.

All of this comes as no surprise to Greg Kelly, a principal with Deloitte consulting who has specialized in the banking industry for the last 24 years.

"I think that this trend will continue," he said. "A number of banks already use video in their branches, and a number of them have moved from click to chat to click to video on your PC at home... Depending on how savvy the user is, you can do almost any transaction and you don't need to walk into a branch."

As part of Deloitte's consulting team Kelly has written on this subject before, including a 2012 article in the Wall Street Journal titled "Is it Time for Real-Time Banking?" The issue for the banks, he says, comes down to cost. (http://deloitte.wsj.com/cio/2012/04/04/is-it-time-for-real-time-banking/)

"When you do a mobile transaction, it's about 10 times less than the cost of an ATM transaction," he said. "When you do an ATM transaction it's about 50 times cheaper than a branch transaction. Banks are always trying to move the customer to the lower cost channel."

The switch to videoconferencing is another step in that direction, allowing banks to achieve through low-cost ATMs functions ordinarily reserved to a branch. Although Burke declined to comment on the costs and savings of Bank of America's Teller Assist program, the external numbers speak for themselves. A 2010 report by Deloitte indicated that banks could reduce costs by as much as 80% per transaction by moving customers from a branch to a traditional ATM, and CFCU's experience with video-enabled machines bears this out.

Kelly explained that under the current model, a bank needs to staff its locations regardless of the cost, which often means money spent on expensive urban real estate and salaries for under-used staff in rural locations. With systems such as the Personal Teller Machine or Teller Assist, a bank can centralize its staff in lower-cost locations, reducing the overhead of both property and time. These savings could come just in the nick of time for Bank of America, which has seen its profits decline sharply over the last few years.

Kelly envisions more and more banks shifting in this direction, driven by both savings and a changing generation's embrace of technology.

"The younger you are, I think you'll be more comfortable," he said. "They've grown up in a new world of digital interaction."

The model has worked very well for CFCU, with Mecca describing it as a great success for both the credit union and its customers. Due to the new system, branches have been able to keep longer hours with shorter wait times than before, he said, and customer response has been positive.

Still, while video tellers may be the wave of the future, Kelly doesn't expect them to completely replace the neighborhood banker anytime soon.

"I think personal interaction is preferable for a more complex transaction," he said, "People want to go in and talk to their financial advisor or wealth advisors. That's a very relationship based product. You're always going to need a face to face basis there, and I don't think that's going to go away."